## Facts

- Buyers and sellers entered a contract in June 1978 for the sale of the sellers’ house.
- The buyers moved in about two months later and soon discovered a termite infestation.
- The buyers filed an equitable action seeking rescission of the purchase-and-sale contract and damages, alleging the sellers knew of and misrepresented the termite condition.
- After viewing the premises, the trial court found the conveyance rested on a mutual mistake of material fact regarding the termite condition.
- The trial court granted rescission and related relief.

## Issues

1. Whether rescission was a proper equitable remedy for a home sale contract formed under a mutual mistake of material fact (termite infestation).
2. Whether rescission should be denied because the parties allegedly could not be restored to the status quo after the sellers bought another home.
3. Whether rescission should be denied because it would impose undue hardship on the sellers.

## Decision

- The New Hampshire Supreme Court affirmed the decree granting rescission.
- Rescission is an equitable, discretionary remedy, and the trial court acted within its discretion in ordering it.
- The ability to restore the status quo is not a literal requirement; equity requires only what is reasonably possible under the circumstances.
- The sellers’ purchase of another house did not, by itself, prevent restoration to the status quo or establish undue hardship.
- The trial court’s finding that the buyers returned the house in the same condition in which they received it supported rescission.

## Legal Principles

- Rescission is an equitable remedy committed to the trial court’s discretion based on the facts of the case.
- A court considering rescission must assess whether the parties can be returned as nearly as possible to their pre-contract positions and whether rescission would impose undue hardship on the defendant.
- The status quo requirement is flexible; absolute restoration is not required when equity can accomplish reasonable restoration.
- In residential sales, post-sale changes such as the seller’s purchase of another home are common and do not automatically bar rescission.

## Conclusion

The court upheld rescission of a home sale contract formed under a mutual mistake about a material termite infestation, holding that equity does not demand literal restoration to the pre-contract status quo and that foreseeable post-sale circumstances, without more, do not establish undue hardship sufficient to deny rescission.


Gordon v. Tafe, 121 N.H. 250, 428 A.2d 892 (N.H. 1981)